Thursday, January 04, 2007

Increasing Energy Efficiency

From an article in today's NY Times titled A Country Less Dependent on Oil Is Free to Make Other New Year’s Resolutions: "A great many folks wish the economy would go on a diet, too, and stop using so much energy."

Well it has, as the graph above shows. In 1949, we used 19,500 BTUs per real dollar of GDP produced. We now use fewer than 9,000 BTUs for every dollar of GDP, a 54% reduction in the energy consumption per dollar of real output over the last 50 years.

The significant increase in energy efficiency has insulated the US economy somewhat from energy shocks. After all, consider that in January of 1999, just eight years ago, oil was trading at $9.50 per barrel and gasoline was below $1 per gallon, see the
data here. In nominal dollars, oil prices went from less than $10 to $70 in eight years, a 7X increase, with very little adverse effect on the U.S. economy. Compare that the economic disasters in the 1970s during the oil shocks went oil prices "only" doubled. The relentless increase in energy efficiency has helped a lot to insulate the US economy from oil shocks.


At 9/22/2007 12:22 PM, Anonymous John B. Daily, Mn. DNR (Ret.) said...

Dr. Perry's article on E85 ethanol is right on!

But he could have mentioned the impact on CRP lands Fed. Program, and the effect on Wildlife & Fish.

More ground put under the plow will result in loss of habitat, and increase more topsoil to be deposited into lakes and streams.

At 9/22/2007 9:28 PM, Anonymous Anonymous said...

Does anyone care about destroying wildlife habitat or our waterways that we all take forgranted?


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